“Who’s going to pay for this vet bill?”
“How are we splitting the cost of the new couch?”
“If you’re the only person who eats smooth peanut butter, why do I have to pay for it too?!”
Ah, the joys of sharing a space – and sharing expenses! – when you’re not married. My partner and I live together and have for almost three years. Believe me when I tell you, I’m a pro at the whole splitting-expenses-with-a-partner jam.
But that’s not to say it happened naturally (it didn’t) or that it was without its fair share of somewhat awkward conversations (it wasn’t). However, facing the how-are-we-going-to-do-money-together issue head on was the best thing we could have done for our finances and our relationship. Here’s exactly how we did it.
We talked about what we wanted to share – and wrote it down
You might have a good idea of what expenses you’re happy to share, and which ones you want to handle yourself – but that’s no guarantee that your partner is on the same page.
To get on that same page, sit down over coffee (or beer) and talk through the expenses you think make sense to handle jointly. Do this before you live together!
Be prepared to tackle why you each think an expense makes sense to share. Anticipate that there will be at least one or two expenses that one of you will use more of than the other. Figuring out whether those are handled jointly – and how – will save you a world of pain later.
We took our incomes into consideration
While you might be entirely on board that rent, utilities, and food are all basically 50/50 expenses, the monkey wrench in the 50/50 equation might be your incomes. Specifically, does it make sense to split things 50/50 if your incomes are more 80/20?
Personally, I’ve always thought income-based expense splitting was the only fair way to go when you live together. If one person is shelling out 30% of their income to cover rent, the other one should too.
Maybe you don’t agree right off the bat but think about it. A percentage-based budget still leaves the higher-income person with way more fun money, even though they’re paying more in absolute terms for shared expenses.
If you haven’t gotten clear with your partner on how much each of you makes, you need to do it before you live together. It’s the only way to navigate whether you’re making joint purchasing decisions that make sense for both of you.
I’m looking at you, swanky apartment that your engineer partner could totally afford that would put you in the poorhouse.
We had the (gulp) breakup talk
On my list of things that are fun to talk about, “what happens if we break up?” is not one of them. But if you’re not married and you’re taking on legal and financial responsibilities together (which yes, an apartment lease totally is) you need to know what you both think will happen in the worst-case scenario.
This topic will need to come up for all of the Big Things, like who’s left with the apartment lease, to who gets the couch or the dog. (And if you’re getting a pet, here are the questions you need to be asking each other first.)
If one person will for sure take ownership of a shared purchase or shared pooch in the event of a split, it might impact how you handle joint expenses now. For example, my partner and I decided I would keep the dog if the worst happened, so any big vet bills? All me, baby.
Last but not least, keep (transparent) track
Once you’ve got all the logistics and big discussions out of the way, the last step is going to seem like a cakewalk: Keep track of your shared spending, and make sure you both have access to review it.
Personally, my partner and I use a Google Sheet to input anything we spend on agreed-upon categories of shared expenses, and we settle up at the end of the month. Since we can both access the spreadsheet anytime, it’s easy to review and to update it (you can snag a copy of our exact spreadsheet here!)
Keeping things on the record and in the open will help you avoid the always-entertaining “You spent WHAT AT COSTCO?!” talks at the end of the month.
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Desirae Odjick, the creator of Half Banked, is all about helping millennials do money differently – without feeling guilty, or stressed, or having to give up lattes. (She loves lattes and is probably drinking one right now.) It turns out, your version of “amazing at money” and hers don’t have to look the same – and she’s into helping people figure out what actually works for them. For example, you likely won’t spend as much money on dogs as she does.